In Patterson v. Dean Morris, LLP, ___ F.3d ___ (Mar. 22, 2006), the Fifth Circuit held (with one judge dissenting) that the statutory time limit for the federal courts of appeals to rule on a discretionary appeal from an order granting or denying remand under CAFA (60 days) does not begin to run until leave to appeal is granted. [Hat tip: How Appealing]
The Fifth Circuit also followed a recent Ninth Circuit holding that the losing party's 7-day time limit to file a petition for permission to appeal is 7 court days, not 7 calendar days. Slip op. at 7 n.1 (citing Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc., 435 F.3d 1140, 1146 (9th Cir. 2006)). The Ninth Circuit so held in Amalgamated even though the statute says that the petition "must be made to the court of appeals not less than seven days after entry of the order," suggesting that the 7 days is a waiting period, not a deadline. 28 U.S.C. § 1453(c)(1) (emphasis added). The court explained that "there is no apparent logical reason for the choice of the word 'less' in the statute" and that "use of the word 'less' is, in fact, illogical and contrary to the stated purpose of the provision." Amalgamated, 435 F.3d 1140 (slip op. at 1093-94).
On January 27, 2006, the Seventh Circuit issued another CAFA opinion, this time holding that "a novel claim tacked on to an existing case commences new litigation for purposes of the Class Action Fairness Act." Knudsen v. Liberty Mutual Ins. Co., ___ F.3d ___ (7th Cir. Jan. 27, 2006). The defendant's previous effort to remove this case to federal court under CAFA failed. SeeKnudsen v. Liberty Mutual Ins. Co., 411 F.3d 805 (7th Cir. 2005). The latest opinion is noteworthy because I believe it is the first one in which a case originally filed before CAFA's effective date was successfully removed based on post-CAFA activity in the trial court. [Hat tip: How Appealing.]
The Seventh Circuit has probably issued more CAFA decisions than any other Circuit, and they are certainly more interesting. Last week, in Phillips v. Ford Motor Co., ___ F.3d ___ (7th Cir. Jan. 30, 2006), the Seventh Circuit held that substituting representative plaintiffs in a pending putative class action does not "commence" a new suit and permit removal under CAFA:
Substitution of unnamed class members for named plaintiffs who fall out of the case because of settlement or other reasons is common and normally an unexceptionable ("routine") feature of class action litigation. [Citations.] But there is a potential complication here: the plaintiff class ... has not been certified ....
Strictly speaking, if no motion to certify has been filed (perhaps if it has been filed but not acted upon), the case is not yet a class action and so a dismissal of the named plaintiffs' claims should end the case. If the case is later restarted with a new plaintiff, it is a new commencement, a new suit. But the courts ... are not so strict. Unless jurisdiction never attached, ... or the attempt to substitute comes long after the claims of the named plaintiffs were dismissed, substitution for the named plaintiffs is allowed. [Citations.]
The courts thus disregard the jurisdictional void that is created when the named plaintiffs' claims are dismissed and, shortly afterwards, surrogates step forward to replace the named plaintiffs.
(Slip op. at 3, 4.) The Court held that the determinative question is whether, under state law, such an amendment "relates back" for statute of limitations purposes. If it does, then no new action has been "commenced" under CAFA.
A recent Court of Appeal decision, Shapell Industries, Inc. v. Superior Court, 132 Cal.App.4th 1101 (2005), is a prime example of a (non-CAFA) case in which the "jurisdictional void" was disregarded. The Shapell court also noted the "unusual procedural scenario" presented when the representative plaintiff's claims are dismissed prior to certification, yet allowed amendment to substitute a new representative plaintiff. (My original post on Shapell is here.)
Speaking of my former partners, I want to extend a long-overdue congratulations to my former partner Jan T. Chilton, also of Severson & Werson. On November 8, Jan presented oral argument before the United States Supreme Court in one of the first cases to be argued before Chief Justice John Roberts. And on December 7, in his first opinion for the Court, Chief Justice Roberts handed Jan a complete and total win. Martin v. Franklin Capital, 546 U.S. ___ (Dec. 7, 2005). A copy of Jan's winning brief is accessible here, the transcript of the argument is here, and SCOTUSblog's post-argument report is here. The case involved whether the plaintiff can recover attorneys' fees for winning a motion to remand a case that was improperly removed to federal court. The decision will increase in importance as more and more cases are removed under CAFA. Jan is the best brief-writer I have ever encountered. I learned a great deal about appellate advocacy and legal writing from working with him.
You might have read some of thenewsreports last week about a new nationwide class action against Apple alleging that the iPod Nano is defective because the display screen scratches too easily. A copy of the first amended complaint is accessible here. The action was filed in the Northern District of California in San Jose, and includes claims based on the warranty and consumer protection laws of the 50 states (except California, a notable omission; the original complaint, which is no longer available online, included California and a UCL claim). I'm not at all privy to the plaintiffs' strategy here, but this case has CAFA written all over it.
In Pfizer, Inc. v. Lott, ___ F.3d ___ (7th Cir. Aug. 4, 2005), the Seventh Circuit rejected another attempt to remove a case to federal court based on the Class Action "Fairness" Act. But before getting to the CAFA issues, the court (Judge Posner) neatly explained the Supreme Court's holding in Exxon Mobil Corp. v. Allapattah Service, Inc., 125 U.S. 2611 (2005) in a single sentence:
The named plaintiffs stipulated that they would not seek or even accept damages in excess of $75,000, and while the stipulation would not bind the other members of the class, the likelihood that [any class member] had damages in excess of $75,000 was sufficiently remote to cast on [the defendant] the burden of presenting some evidence or argument to establish the plausibility of an inference that at least one member of the class could cross the $75,000 threshold, which would establish jurisdiction over the entire class.
Slip op. at 2 (citations omitted). (I'm glad to find I got it right after my quick read of Exxon when it came down in late June.) (UPDATE: An anonymous commenter points out that I was too quick to endorse Judge Posner's reading of Exxon. Exxon held that if "at least one named plaintiff" (not just any class member) meets the $75,000 jurisdictional threshold, then diversity jurisdiction is present. Thanks to Mr./Ms. Anonymous for pointing this out.)
After determining that diversity jurisdiction was not present under Exxon, the court turned to CAFA. The case was filed in state court on the day before CAFA was enacted, and was removed within thirty days after that. The court rejected the argument that the word "commenced" in CAFA meant the date of removal. Slip op. at 3. It's interesting that the court employed the state-law definition of the word "commenced" in determining its meaning for purposes of CAFA. In Illinois, the filing of the complaint "commenced" the case, so CAFA did not apply. Slip op. at 3. This means that, potentially, CAFA might operate differently in some states than in others. The opinion ended with these words:
This is not to belittle Pfizer's indignation at the plaintiffs' having beat the statute by one day, but their gamesmanship actually hurts its argument. Pharmaceutical and other companies that pressed for the enactment of the Class Action Fairness Act were doubtless acutely aware, as the bill that became the statute was wending its way through Congress en route to enactment, that the prospect of its enactment would spur the class action bar to accelerate the filing of state-law class actions in state courts. Doubtless the companies made their concerns known to Congress. The fact that Congress did not respond by writing "removed" (or "removed after the date of enactment but within 30 days of the orignal filing") instead of "commenced" is telling.
Slip op. at 4. Is it "gamesmanship" to file suit based on the law in effect on the filing date? I would argue not. As the opinion observes, Congress could have made CAFA retroactive if it wished to. Nor should a defendant be "indignant" about being sued if, in fact, it violated the law. But in any event, thanks to the reader who forwarded this case to me. And for more interesting reading, check out the Becker-Posner Blog, which Judge Posner writes with Professor Gary Becker (winner of the Nobel Prize in Economics).